BlueScope Steel has issued a stark warning about the future of Australian manufacturing as soaring energy prices and unpredictable trade policies hit its bottom line. The steel giant, which has long been a pillar of the nation’s industrial sector, reported a dramatic 90% drop in its full-year profit, underscoring the urgent need for reforms to address Australia’s escalating energy crisis.
The company’s dire financial results reflect a broader issue threatening Australia’s manufacturing industry. BlueScope’s CEO, Mark Vassella, has called for immediate changes to national energy policies, as gas prices in Australia now outstrip those in the United States by several times. As BlueScope continues to navigate these challenges, its future strategies could play a pivotal role in shaping the trajectory of Australia’s industrial sector.
Soaring Energy Costs Weigh on Profits
BlueScope’s full-year profit fell to just $84 million, a sharp decline from the $721 million recorded in the previous year. This significant downturn is largely attributed to soaring energy costs, particularly the rising price of gas, which has become a major financial burden for Australian manufacturers. According to Vassella, gas prices in Australia are currently three to four times higher than in the United States, placing local industry at a severe disadvantage.
The company has responded by submitting a detailed proposal to the federal government’s Gas Market Review, advocating for urgent reforms to ensure gas is available at more competitive prices for domestic use. Among the key suggestions is the halt of LNG spot cargo exports to overseas markets, which Vassella argues would help alleviate supply pressures in the domestic market.
He also called for long-term structural reforms to stabilise energy prices for Australian manufacturers. The ongoing energy crisis, Vassella warns, could undermine the government’s “Future Made in Australia” initiative, which aims to bolster local manufacturing.
Trade Policy Instability and Its Impact
In addition to energy concerns, BlueScope faces considerable uncertainty due to volatile global trade policies. A notable example was the proposed 50% tariff on Brazilian pig iron, which was later reversed, illustrating the unpredictable nature of international trade regulations. Vassella described such fluctuations as a “moving feast” for the steel industry, creating a challenging environment for manufacturers to plan ahead.
Despite these challenges, BlueScope has managed to offset some of the risks through its diversified, multi-domestic strategy, particularly in North America, where local production insulates the company from price swings. However, the uncertainty surrounding tariffs, coupled with supply chain disruptions and fluctuating demand, continues to create a volatile market that poses risks for long-term stability.
